The Effect of Minimum Wages on Labour Market Outcomes: County-Level Estimates from the Restaurant-and-Bar Sector

We use US county‐level data on employment and earnings in the restaurant‐and‐bar sector to evaluate the impact of minimum‐wage changes in low‐wage labour markets. Our estimated models are consistent with a simple competitive model in which supply‐and‐demand factors affect both the equilibrium outcom...

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Bibliographic Details
Published in:British journal of industrial relations 2012-09, Vol.50 (3), p.412-435
Main Authors: Addison, John T., Blackburn, McKinley L., Cotti, Chad D.
Format: Article
Language:English
Subjects:
Earnings
Economic disequilibrium
Economic models
Employment
Hotel industry
Industrial relations
Labor economics
Labor market
Labour market
Markets
Minimum wage
Minimum wages
Relative wages
Restaurants
Studies
Supply and demand
U.S.A
United States
Wage-employment relationship
Wages & salaries
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Summary:We use US county‐level data on employment and earnings in the restaurant‐and‐bar sector to evaluate the impact of minimum‐wage changes in low‐wage labour markets. Our estimated models are consistent with a simple competitive model in which supply‐and‐demand factors affect both the equilibrium outcome and the probability of the minimum wage being binding. Our evidence does not suggest that minimum wages reduce employment once controls for trends in county‐level sectoral employment are incorporated. Rather, employment appears to exhibit an independent downward trend in states that have increased their minimum wages relative to states that have not, thereby predisposing estimates towards reporting negative outcomes.
ISSN:0007-1080
1467-8543
DOI:10.1111/j.1467-8543.2010.00819.x